‘Something Different Dawning In The Stock Market’ – Patrick Barkey -UM Bureau Of Business And Economic Development [YouTube]
The American stock market has had a rough ride since the start of 2016. On Tuesday, the Dow Jones 30 Industrial was down over 300 points to just over 16,000, and the average investor is wondering what to do next.
Patrick Barkey, Director of the University of Montana Bureau of Business and Economic Research said on Wednesday that things are changing on the world stage.
"Very broadly speaking, the stock market is digesting new information," Barkey said. "When it moves as much as it has since the beginning of the year, it means that something very different is dawning on the folks making trades, and the answer to that question is largely offshore."
Barkey was referring to the steep plunge that has occurred in China's stock market, which normally is controlled by that country's Communist government.
"The news to investors collectively is that China can't control its economy," said Barkey. "At one time there was central control of the Chinese economy, but it's very apparent now that's no longer the case. The Chinese do still control their statistics, and that's why their statistics are at odds with what anyone even outside that country can see."
Barkey said all investors, both individual and institutional, should be paying close attention to the markets at this time.
"It's a fairly complicated question and largely depends on how old you are, and if I may put it this way, what is your appetite for risk?," he asked. "If you're young and have a lot of years ahead of you, you may have a higher appetite for risk than you would if you were nearer retirement age and don't have a lot of opportunity to offset any sort of downward movement in your portfolio."
Barkey said each individual investor is ultimately responsible for how they manage their money.